Amid International Market Decline, Israel Defense Exports Reach a Record High in 2012

Brig. general (Ret) Shmaya Avieli, the head of Defense Exports Directorate (SIBAT) at Israel’s Ministry reported today that Israel’s defense exports in 2012 reached an all time record, totaled at US$7.473 billion. This peak came after a much lower year in 2011, as SIBAT’s reported $5.823 billion in export sales. According to Avieli, the results for 2012 were surprising, particularly due to the economical pressure and reduced demand for military hardware in recent years. (The financial reports released by the top three defense companies did not show such an increase, nor were they indicating the trough experienced in 2011.)

Breakdown of Israel’s defense export by area of activity (subscribe for the full analysis)

The peak in 2012 and the low total in 2011 have similar causes – ‘mega deals’ that increase or reduce the annual total in significant numbers. In 2011 the lower level was attributed to a delay in the signature of a mega deal in Central Asia that was eventually listed in 2012, which also included another mega deal with the Italian government. When calculated by three-year floating average, the trend clearly shows a consistent growth trend from 2005 to date.

According to Avieli the dramatic growth experienced since 2008 was attributed to large-scale acquisition of military hardware by the coalition partners, preparing their forces to meet evolving threats in Iraq and Afghanistan. “We are now entering a challenging era, where the reduction in acquisition budgets that derive from the withdrawal from these theaters and from budgetary constraints is a challenging trend” Avieli explained. He hope that the drop in 2011 will remain ‘an isolated episode’, “We are working hard to prevent repeating such episode but we can not guarantee this will be the case” Avieli said.

Breakdown of Israel’s defense export by area of activity (subscribe for the full analysis)

In 2012 Israel exported missile systems at a gross value worth over US$1.6 billion – the largest segment in the export pie. The main driver in this segment was Rafael Advanced Defense Systems, selling Spyder air defense systems, Spike multi-purpose guided missiles and SPICE air/ground guided weapons. Other contributors to this segment include the Israel Aerospace Industries (IAI’s) Harop. Another strong segment was the export of over a billion dollars worth of radars – attributed exclusively to IAI’s subsidiary Elta Systems. Among these radars were two Conformal Early Warning Radar (CAEW) systems sold to Italy, and significant numbers of Multi-Mission Radar derivatives, produced for a number of countries. Additional radars are also included in high profile systems such as Barak 8 and Spyder, listed for export under missile systems.